5 Stocks Trading Below Net Cash - Part II

I screened with Finviz for companies that trade with a Price/Cash ratio of less than 1 and checked if the companies had any debt. I then calculated the net cash (cash - debt). I wrote an article on August 18 titled "5 Stocks Trading Below Net Cash". Here is a look at five additional companies that trade below the net cash level currently:

1. Linktone (NASDAQ:LTON) is a provider of rich and engaging services and content to a wide range of traditional and new media consumers and enterprises in Mainland China, Indonesia, Malaysia, Hong Kong and Singapore. Linktone focuses on media, entertainment, communication and edutainment products, which are promoted through the company's strong nationwide distribution networks, integrated service platforms and multiple marketing sales channels, as well as through the networks of leading mobile operators in Mainland China and Indonesia.

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Financials

The company reported the second-quarter financial results on August 6 with the following highlights:

Revenue

$14.0 million

Net loss

$0.3 million

Cash

$112.1 million

Debt

$6.0 million

Net cash

$106.1 million

Shares outstanding

42.1 million

Net cash per share

$2.52

Outlook

For the third quarter ending September 30, 2012, Linktone anticipates gross revenues to be in the range of $12 million to $14 million.

My analysis

The stock is currently trading at a 25% discount to its net cash per share value. I would recommend buying the shares below the net cash level. I am expecting the company to post a small net profit for the full year. I have a long position in the stock.

2. Gulf Resources (NASDAQ:GURE) operates through two wholly-owned subsidiaries, Shouguang City Haoyuan Chemical Company Limited (NYSEARCA:SCHC) and Shouguang Yuxin Chemical Industry Co., Limited (SYCI). The company believes that it is one of the largest producers of bromine in China. Elemental Bromine is used to manufacture a wide variety of compounds utilized in industry and agriculture. Through SYCI, the company manufactures chemical products utilized in a variety of applications, including oil & gas field explorations and as papermaking chemical agents.

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Financials

The company reported the second-quarter financial results on August 9 with the following highlights:

Revenue

$31.3 million

Net income

$5.7 million

Cash

$72.0 million

Debt

$0

Net cash

$72.0 million

Shares outstanding

34.6 million

Net cash per share

$2.08

Outlook

CEO, Xiaobin Liu commented on August 9:

In the near term, we are likely to encounter operating pressure due to a foreseeable increase in labor and lowered bromine price influenced by the nationwide housing price control by the central government. As soon as the economy pass the phase of structural change and the condition, turn favorable, we expect we will be able to benefit from the underground bromine reserve we previously obtained with our equipment and facilities being consistently upgraded. In addition, as the market prices of potential acquisition targets are subjected to undervaluation due to the current economic environment, we will attempt to retain cash in order to take advantage of the market by acquiring quality assets that can enable our company to sustain long term growth in the future.

My analysis

The stock is currently trading at a 49% discount to its net cash per share value. I would recommend buying the shares below the net cash level. I am expecting the company to be profitable for the full-year 2012. I have a long position in the stock.

3. China Xiniya Fashion Limited (NYSE:XNY) is a leading provider of men's business casual apparel in China. The company designs and manufactures men's business casual and business formal apparel and accessories, which are marketed under the Xiniya brand, and sells through its distribution network that includes 29 distributors. Its products are sold to consumers at over 1,600 authorized retail outlets owned and managed by third parties located in 21 provinces, five autonomous regions, and four municipalities in China. This retail network focuses on second and lower-tier cities, where increasing affluence has led to an improvement in living standards and where most international men's apparel brands do not have a significant presence. The company's target consumers are male working professionals in China between the ages of 25 and 45 who seek fashionable clothing to suit their working and lifestyle needs.

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Financials

The company reported the second-quarter financial results on August 14 with the following highlights:

Revenue

$34.8 million

Net income

$3.5 million

Cash

$179.4 million

Debt

$0

Net cash

$179.4 million

Shares outstanding [ADS]

57.5 million

Net cash per share

$3.12

Outlook

Revenue in RMB for the third quarter of 2012 is expected to increase by 8%-11%.

Earnings per ADS in the third quarter of 2012 are expected to be in the range of $0.09 -$0.11.

Net additions of retail outlets for 2012 are expected to be more than 100.

My analysis

The stock is currently trading at a 63% discount to its net cash per share value. I would recommend buying the shares below the net cash level. I am expecting the company to be profitable for the full-year 2012. I have a long position in the stock.

4. Weikang Bio-Technology Group (OTC:WKBT) is principally engaged in developing, manufacturing and distributing Traditional Chinese Medicine [TCM], and health and nutritional supplements in China, in compliance with requisite Chinese licenses and approvals. The company is also expanding its business scope to develop, manufacture and distribute Chinese herbal extract products and GMP certified western prescription and OTC pharmaceuticals through its acquisition of Tianfang Pharmaceutical Co., Ltd.

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Financials

The company reported the second-quarter financial results on August 14 with the following highlights:

Revenue

$11.0 million

Net income

$1.0 million

Cash

$81.5 million

Debt

$0

Net Cash

$81.5 million

Shares outstanding

34.8 million

Net cash per share

$2.34

My analysis

The stock is currently trading at a 93% discount to its net cash per share value. I would recommend buying the shares below the net cash level. I am expecting the company to be profitable for the full-year 2012. I have a long position in the stock.

5. Sky-mobi Limited (NASDAQ:MOBI) operates the leading mobile application store in China based on number of user visits, downloads and handset manufacture partners. The company works with handset companies to pre-install its Maopao mobile application store on handsets and with content providers to provide users with applications and content titles. Users of its Maopao store can browse, download, and enjoy a range of applications and content, such as single-player games, mobile music, and books. The company's Maopao store enables mobile applications and content to be downloaded and run on various mobile handsets with different hardware and operating system configurations. The company also operates a mobile social network community in China, the Maopao Community, where it offers mobile social games, as well as applications and content with social network functions to its registered members.

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Financials

The company reported the fiscal first-quarter 2013 (ending June 30) financial results on August 12 with the following highlights:

Revenue

$24.1 million

Net loss

$0.8 million

Cash

$94.7 million

Debt

$0

Net cash

$94.7 million

Shares outstanding

32.3 million

Net cash per share

$2.93

Outlook

For the fiscal second quarter 2013 ending September 30, 2012, Sky-mobi expects total revenues to be in the range of $21.2 million to $22.8 million.

Revenues for the fiscal year ending March 31, 2013 are expected to be in the range of $85.8 million to $88.2 million.

My analysis

The stock is currently trading at a 34% discount to its net cash per share value. I would recommend buying the shares below the net cash level. I am expecting the company to report close to break-even results for the fiscal 2013 full-year. I do not have a position in the stock currently.

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